In a fascinating decision issued today, the D.C. Circuit Court of Appeals struck down EPA’s Summit Directive. The Summit Directive – sounds ominous – was issued in response to the 2012 decision in Summit Petroleum Corp. v. EPA, in which the Sixth Circuit Court of Appeals ruled that EPA could not consider two facilities as “adjacent” for Title V and NSR permitting purposes unless they are, in fact, adjacent. EPA had previously interpreted facilities as adjacent based in part on whether the facilities, even if not physically adjacent, were “functionally interrelated.”

Following the decision in Summit, EPA determined that it would continue to apply the broader definition of “adjacent” at facilities located outside the Sixth Circuit.  It then issued the Summit Directive documenting that position. The National Environmental Development Association sued, arguing that the result of the Summit Directive was that its clients located outside the Sixth Circuit are at a competitive disadvantage as compared companies within the Sixth Circuit. The D.C. Circuit agreed.

EPA argued that the doctrine of “nonaquiescence” permits EPA to maintain its interpretation of the meaning of “adjacent” in states outside the Sixth Circuit, in the hope that it might persuade a different circuit (and perhaps ultimately the Supreme Court) to adopt EPA’s interpretation. Seems reasonable. There is only one problem. EPA’s own regulations require it to:

Assure fair and uniform application by all Regional Offices of the criteria, procedures, and policies employed in implementing and enforcing the act.

To the Court, while EPA has discretion in interpreting its own regulations, it is also “axiomatic” “that an agency is bound by its own regulations.”

In response to EPA’s argument that it would be absurd to force EPA to apply the Sixth Circuit rule across the entire country, when the Sixth Circuit does not set national law, the Court basically concluded that EPA brought the problem upon itself by promulgating regulations requiring regional conformity. Game over.

Time for all of us practitioners to start looking for other such regional uniformity requirements hidden away in EPA’s regulations.